On Friday August 9, 2013, President Obama signed two bills into law that will streamline the regulatory process for small hydropower projects across the country. In addition to the practical impacts on the regulatory process, the bipartisan support for this targeted energy legislation underscores the value and potential of new hydropower development to support the nation's energy infrastructure. Here are some highlights from each bill:

Increases the threshold for exemption from licensing by the Federal Energy Regulatory Commission ("FERC") from 5 MW to 10 MW for small hydroelectric projects;

Increases the threshold for exemption from licensing by FERC to 40 MW for all projects, regardless of whether the project is developed by a private party or a state or local government;

Removes small (5 MW or less) conduit hydropower projects from FERC jurisdiction, provided that the facility is constructed for electric power generation and is not located on a federally-owned conduit;

Authorizes FERC to extend the term of a preliminary permit for two years beyond the three-year maximum, provided that the permittee is conducting its feasibility investigations diligently and in good faith;

Directs FERC to investigate the feasibility of a two-year licensing process for new hydropower projects at nonpowered dams and closed loop pumped storage projects; and

Directs the Department of Energy to study (1) the technical flexibility and potential of pumped storage facilities to support intermittent renewable energy generation through grid reliability and (2) the hydropower potential of existing conduits.

Amends the Reclamation Project Act of 1939 to authorize the Secretary of the Interior to contract for small (5 MW or less) conduit hydropower projects at facilities controlled by the Bureau of Reclamation;

Provides irrigation districts and water-user associations the first right to develop small hydropower on their conduits through a lease of power privilege;

Directs the Bureau of Reclamation to use its categorical exclusion process under the National Environmental Policy Act for small conduit hydropower projects (except that it will not apply to the siting of associated transmission facilities on Federal lands); and

Grandfathers in existing applications that have been filed with the Federal Energy Regulatory Commission for small conduit projects on Reclamation facilities.

The first of these bills, H.R. 267, passed both the House and Senate unanimously, showing resounding bipartisan support for the development of small hydropower facilities in the United States. By streamlining the FERC licensing process and removing some small conduit hydropower projects from FERC jurisdiction altogether, Congress has substantially reduced the development and transaction costs associated with making small-scale hydropower a reality.

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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